Oh MyEG! MyCC’s attempt in breaking up Monopoly
22 October 2015 | Source: Tay & Partners
Malaysian competition law watchdog, the Malaysia Competition Commission ("MyCC") shows its teeth, again. In a press release on 6 October 2015, MyCC said it has issued a proposed decision against My E.G. Services Bhd ("MyEG") for abusing its dominant position in management of online foreign workers permit renewal application. MyCC proposed to impose a financial penalty of RM307,200 and an additional penalty of RM15,000 for each day MyEG failed to comply with the remedial actions.

GLC is not exempted from Competition Act 2010

Early of this year, many have raised concerns about Putrajaya's decision to outsource the renewal of the foreign workers' permits to the private firm and the mandatory use of MyEG for renewal of their foreign workers work permit. Following public outcry, a complaint was lodged with MyCC against MyEG. It should be noted that government-linked companies are not exempted and are similarly subject to the provisions of the Competition Act 2010 ("CA 2010").

Where CA 2010 comes into all this?

There is nothing wrong with tough competition even from a dominant firm; but when its intention is to eliminate competition or prevent entry into or expansion in a market, there could be abuse of dominant position. Under competition law, it is anti-competitive if a dominant firm ties its customers by an exclusive purchase obligation, i.e. to purchase all or most of a particular type of goods or services only from a dominant supplier. The objection is clear - exclusive dealing may impede or prevent competitors from entering into or expanding into the market.

In this case, MyEG's wholly owned subsidiary, My E.G Commerce Sdn. Bhd., is carrying out the provision of auto insurance intermediary services. MyEG therefore appears to be present at several levels of supply chain at both online renewal and (through My E.G. Commerce Sdn. Bhd.) providing insurance services. It is commonly perceived that a vertically integrated dominant company, because of its dominant position in upstream, is better placed in a position to control downstream access. However, the law does not presume a dominant company will automatically abuse its dominant position. Besides first proving MyEG having a dominant position, MyCC have to prove MyEG has indeed abused its position.

What's next?

The proposed decision will not be made available in the public domain. After receiving the proposed decision, MyEG will be given a period of 30 days to submit a written representation on the proposed decision. In addition to written representation, MyEG is entitled to make an oral representation before the MyCC before a final decision is issued. It should be noted that the burden of proof lies on the MyCC. If MyCC fails to discharge its burden of proof, the infringement will not stand. In short, the proposed decision merely represents MyCC's provisional finding and it is not conclusive on the guilt of MyEG until and unless a final infringement decision is issued.

Remedial actions and private actions

Under section 40(1)(d) of the CA, MyCC can direct MyEG to change its business practice if it concludes that MyEG infringes the law. MyCC may also resort to remedial action for MyEG to take positive action to ensure an efficient gateway for all insurance companies to sell the mandatory insurances.

Under section 64 of the CA, any person who suffers loss or damage directly as a result of an infringement under the CA is entitled to bring legal action against the infringer in a court to recover damages or to seek such other relief. Given that, an infringer is potentially exposed to private actions in court for damages in addition to financial penalty.

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